Some 70 representatives of renewable power companies, utilities, retail electric providers, industries, environmental groups, and consumer organizations met this week at the Public Utility Commission (PUC) to discuss a proposed “strawman” that would finally implement a provision of a 2005 law, requiring retail electric provider to obtain at least 500 MWs of non-wind renewables like solar, geothermal and biomass by 2015.

While the majority of participants were supportive of the strawman, which is expected to be published as a proposed rule later this spring, Philip Oldham, representing the Texas Industrial Electric Consumers, argued that the PUC lacked the authority to make the 500 MW provision mandatory.

Thus, while SB 20 from the 2005 Legislative Session did require that at least 5,880 MWs of renewable power be developed, Oldham argued that the 500-MW non-wind renewable set-aside had been specifically called a “target” and not a goal, and was not mandatory.

When pressed by others that a 2007 law – HB 1090 – had amended a separate statute and referred to the target as a goal, and granted PUC the authority to establish penalties called Alternative Compliance Payments to achieve that target, Oldham said PUC did have some discretion to establish ACPs, but could not make the 500 MWs an actual mandate.

The other presenters, however, disagreed with this assessment and were generally supportive of the rule. The proposal would require that retail electric providers in the competitive electric market either

invest in contracts with renewable power developers,

purchase renewable energy credits,

or pay an alternative compliance payment.

In addition, the proposed rule would create a further carve-out
of the 500 MWs by requiring 50 MWs come from solar energy.

There were differing opinions on the wisdom of creating a specific solar carve-out. Greg Blue, representing Sunpower, one of the leading producers of solar power projects using photovoltaic panels argued that Texas would be better off letting each technology compete against one another within the 500 MWs.

A representative of Acciona Solar Power, argued that a solar carve-out was needed, and that it should be significantly larger than 50 MWs, since a single concentrating solar plant could take up that entire amount.

Mike Sloan, representing Vertus Energy, called for a technologically-neutral carve-out for distributed renewable power, a position supported by the Sierra Club. Sloan also said that small distributed-scale wind should be allowed in the non-wind RPS.

Others, like Brad Jones from Luminant, argued that renewable storage technologies should be included in the non-wind RPS as a way to provide incentives to new technologies.

Representatives of biogas companies suggested that changes were needed in the rules to allow biogas – whether from cow manure, landfill gas, or crops – to flow to existing infrastructure, such as natural gas plants, as long as it was displacing fossil fuels with renewable fuels.

According to Bob Truman, with Centerpoint Energy, such changes could help prevent the need for expensive electricity plants at every landfill to capture methane, and instead allow biogas to flow where it was cheapest, displacing fossil fuels in the process.

David Power, representing Public Citizen, pointed out the large benefits Texas was already enjoying with the development of large-scale wind, including reduced emissions, thousands of jobs, and the lowering of the market price of energy as wind has helped balance out the market.

Power said a 500 MW short-term goal for non-wind renewables and a 5,000 MW long-term goal – by 2025 – should do the same, with the societal benefits far outweighing the costs.

Ned Ross, on behalf of the retail electric providers, said they were supportive of the rule generally, but were concerned about the potential costs to consumers, as more and more programs require costs to be passed on to consumers.

He said a better approach than a piece-meal 500 MW target would be make sure that everyone in the state – whether in the competitive markets, or in areas like Austin and San Antonio where residents get their electricity from a municipal utility – participates in the benefits of a renewable market, and also everyone pays for it.

An issue throughout the discussion was the appropriate level of the Alternative Compliance Payments, which act to set the cap on the costs of the renewable market.

While the strawman sets ACPs between $60 and $100 per megawatt hour, several presenters suggested that unless the ACPs were higher, retail electric providers would have an incentive to just pay the fines, and not help to drive the development of renewable energy.

Most felt that $200 per megawatt hour was a more reasonable figure, particularly given the initial expense of developing new technologies like utility-scale solar, geothermal and distributed PV solar.

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